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Ceres Power shares worth 300p, says Liberum in bullish ‘buy’ note

Liberum has initiated coverage on Ceres Power, which has developed a low-cost fuel cell called SteelCell

fuel cells
Unlike batteries which store energy, fuel cells produce energy

Ceres Power Holdings PLC (LON:CWR) shares surged on Friday after City broker Liberum said the fuel cell specialist’s shares are worth almost double their current value.

The AIM company’s shares were up almost 4% to 171.5p in morning trading, although that is still well short of the 300p Liberum thinks they are worth.

READ: Ceres launches first fuel cell system in Japan

Alongside their bullish price target, the analysts gave Ceres, which counts Bosch and Nissan as partners, a ‘buy’ recommendation.

Justifying the punchy outlook, Liberum pointed out three things that are driving interest in the company: the global drive for clean air, concerns about centralised electricity generation, and technology readiness.

“We think within a decade, annual revenues could exceed £150mln and earnings and free cash flow could exceed £100mln,” Liberum said in a note to clients.

Given that this year will be the fourth in a row that Ceres has doubled its revenues, the forecast isn’t perhaps as wild as it first seems.

Three key markets

In order for the company to reach those lofty heights though, Liberum is looking for, and expects, more commercial traction in three key sectors.

Firstly, the chin scratchers expect Ceres to partner up with more bus and truck firms in the coming years, calling this market a “potential sweet spot” for the company as authorities step up the introduction of low emission zones.

Another “exciting opportunity” is the combined heat and power (CHP) systems market, as is the use of fuel cells in data centres, operators of which are increasingly “seeking to deploy renewable energy”.

Quick facts: Ceres Power Holdings PLC

Price: 440.4 GBX

Market: LSE
Market Cap: £677.56 m


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Full interview: Ceres Power eyes expansion following new Bosch deal

This month German engineering firm Bosch increased its stake in Ceres Power Holdings (LON:CWR) to around 18% from 4% following a share subscription, netting Ceres £38mln. It was Bosch that approached Ceres too, pinpointing Ceres steel fuel cell technology as potentially the best in the...

on 24/1/20

2 min read